So as you must know by now, S&P lowered the sovereign debt rating of 10 Euro-zone countries on January 13. This included France, Austria, Italy and Spain. It will be interesting to see what this will mean for France, although my guess is that the markets have been waiting for this for a number of months, so these rating cuts are only a confirmation of a truth long known by the market. Stay tuned for a review of sovereign bond market next week.
Trade Surplus and New Orders
On better news, Eurostat published figures showing that trade surplus and new orders have gone up in the Euro-zone, in November and October 2011. This implies a growth on the external sector and on the investment side which provides some encouragement for the future.
SGP, EDP Belgium, Cyprus, Malta, Poland and Hungary
On more mixed news, the European Commission published the Excessive Deficit Procedure (EDP) reports for Belgium, Cyprus, Malta, Poland and Hungary. It found the first 4 countries to have addressed previous concerns while it considered Hungary was faltering. Fitch Ratings found that this was good news as it showed that the SGP reforms implemented over the year had not been for nothing.
Standard & Poor’s likes the ECB
The S&P considered the role of the ECB in dealing with the Euro-Zone sovereign debt crisis as having been constructive, much more so that the role played by the Euro-Zone governments, least of which Germany. This goes to show the relevance of monetary intervention, in particular the rate cuts and LTROs of December 2012.